Understanding aged care home accommodation costs

Aged care homes may set their room prices depending on:

• whether it’s a single or shared room, or if it has a shared bathroom or ensuite
• the size of the room
• the geographical location of the aged care home.

While there is flexibility in how you pay for your accommodation, it’s still important to choose a room within your budget.

Some providers may offer different accommodation options depending on what you can afford. 

You can find and compare room costs using the Find a provider tool.

Aged care homes are required to publish their maximum accommodation costs for their various rooms on this website. You and your provider can negotiate and agree on a lower price. However, you cannot be charged more than the published price for that room.

If this happens, your provider can request that you maintain the agreed accommodation payment. If they do, you can choose to: 

• pay additional or higher DAPs or DACs (due to your lump sum becoming smaller)
• top up your lump sum, or 
• do a combination of both.

Yes. Your provider may also agree to let you draw other aged care fees from your RAD or RAC balance, such as your basic daily fee or your means tested care fee. It is your provider’s decision whether they choose to allow this.

Yes, it can. The balance of an accommodation lump sum is counted as an asset in the aged care means assessment. This means it is considered when working out your means tested care fee and/or accommodation contribution.

However, an accommodation lump sum is exempt from the age pension means test.

It is recommended that you seek independent financial advice to understand if paying a lump sum works best for you.

The Aged Care Act 1997 does not prevent a family member from paying part or all of your accommodation costs. However, any lump sum payment made by the family will be counted as your asset for aged care purposes. This means it may affect your means tested care fee or accommodation contribution.

It is recommended that you seek independent financial advice to understand if this option works best for you.

It is also recommended that you seek independent legal advice before you enter into a loan agreement with a relative or friend. It is important to understand what this could mean for you and your family when you leave the aged care home.

If you are a member of a couple, half the combined income and assets of both you and your partner are included in the means assessment. This happens regardless of who earns the income or whose name the asset is held in.

This means that if your partner is in aged care or planning to move into aged care, your paid lump sum may affect your partner’s means tested care fee or accommodation costs.

It is important that you seek independent financial advice to understand if paying a lump sum works best for you and your partner.

Your provider is not obliged to refund lump sums while you remain in care, although they may choose to do so.

This means that if you want part of your lump sum back while you are in care, you will need to ask your provider if they will refund this amount to you.

If you choose to pay for your accommodation by DAP, the amount is worked out by applying the maximum permissible interest rate (MPIR) to your agreed room price and dividing the amount by 365.

Example 1

If you agree to a room price of $500,000, your DAP will be worked out as follows:
DAP = (room price × MPIR) / 365
        = ($500,000 × 8.15%) / 365
        = $111.64

Example 2

For the same room price of $500,000, you could choose to pay a part RAD of $200,000 and a DAP based on the remaining $300,000. For this combination payment, your reduced DAP would be worked out as follows:

Reduced DAP = ((agreed room price − RAD paid) × MPIR) / 365
                        = (($500,000 − $200,000) × 8.15%) / 365
                        = ($300,000 × 8.15%) / 365
                        = $66.99

Note: The MPIR used in example 1 and 2 (8.15%) is current as at 1 October 2023.

The MPIR that applies when working out your DAP is fixed at the date you agree to a room price with your provider. Increases or decreases to the MPIR that occur after this time will not affect the rate that applies to you.

If you have paid a part RAD, you can tell your provider to draw your reduced DAP amount from your paid RAD. Over time, this will make your lump sum smaller and your daily payment larger.

If you are eligible for government assistance with your accommodation costs, Services Australia will write to your provider to advise them of the DAC you are eligible to pay. This amount applies only if you choose to pay for your accommodation entirely by daily payments.

If you wish to pay part of your accommodation contribution as a lump sum (RAC), your provider will need to calculate a reduced DAC amount for you.

For example, if Services Australia advises that you are eligible to pay a DAC of $16.00 per day, and you choose to pay a part RAC of $20,000, your provider will work out your reduced DAC using this formula:

Reduced DAC = DAC advised by Services Australia – ((Balance of RAC paid x MPIR) / 365)
                        = $16.00 – (($20,000 × 8.15%) / 365)
                        = $11.53

Note: The MPIR used here (8.15%) is current as at 1 October 2023.

The MPIR that applies to you is set on your date of entry to care. Increases or decreases to the MPIR that occur after you have entered care will not affect the rate that applies to you.

You can tell your provider to draw your reduced DAC amount from your paid RAC. Over time, this will make your lump sum smaller and your DAC payment larger.